The lowered valuation is attractive compared with the firm's peers and should help generate interest in the roadshow China Resources Power Holdings has priced its initial public offering at a lower than earlier indicated valuation of HK$2.57 billion, as it launched an international roadshow to convince investors its shares were attractive despite a short profit record. The listing candidate - part of conglomerate China Resources (Holdings) - aimed to sell 828 million new shares to international institutional investors and 92 million shares to Hong Kong public investors at HK$2.20 to $2.80 each, market sources said. The price range represents 26.2 to 33.3 times its own net profit forecast this year of at least HK$310 million. The range was 10.2 to 13 times Morgan Stanley's estimated net profit for next year of about 791 million yuan (HK$739 million) and 9.63 to 12.26 times BOC International's forecast of 838 million yuan. The price range means the red-chip candidate expects to raise between HK$2.02 billion and $2.57 billion, lower than the market's expectation of US$300 million to $350 million but a more attractive valuation compared with the firm's peers. Based on yesterday's closing prices and next year's profit forecasts, Huaneng Power's prospective price-to-earnings ratio stood at 16.43, Beijing Datang at 16.6 and Shandong Power at 12.18, according to Reuters. Morgan Stanley and BOC are the joint book-runners of the offer. First State Investments senior portfolio manager Martin Lau Kwok-kit said the indicative price range was reasonable and the profit forecasts made by the investment banks were fairly aggressive. 'China Resources Power's execution risk is quite high as it has an aggressive plan to double capacity next year. You cannot solely look at price-earnings ratios.' The company yesterday met investors in Hong Kong. Similar roadshows will also take place in other parts of Asia, Europe and the United States. China Resources Power is expected to start its Hong Kong offer on November 3. Pricing of the company's shares is expected to take place on November 6, ahead of their listing on November 12. The majority of the proceeds will fund green-field power plants and boost working capital, according to the company's preliminary listing prospectus. Incorporated in 2001, China Resources Power is a relative newcomer to China's booming electricity market. The company will expand largely through building plants, with a HK$15 billion investment earmarked for that purpose over the next three years, the aim being to boost capacity by 187 per cent to 4,438 megawatts in 2005. Marketing materials prepared by underwriting syndicate member CLSA said funding of the investment would partly come from bank borrowings, which would put pressure on China Resources Power's financial strength. However, before the listing, the company reduced its debts through a capitalisation scheme. The scheme capitalised China Resources Power's HK$5.41 billion loans owed to parent China Resources Holdings into 2.74 billion shares, or 74.65 per cent of the issued share capital after the listing.